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Economics, oil and Ecuador - An ethical ransom note to the world

Written by Ed Dolan Sunday, 14 August 2011 22:49
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Writing in The Observer (14.08.2011) John Vidal described the outcome after oil was discovered in Ecuador's rainforest:

When large reserves of oil were discovered under Yasuní national park, Ecuador offered the world a choice: give us money and we will not allow drilling. Now $60m must be found by December...

Professor Edwin Dolan, a longtime researcher of economic and environmental issues, and author of the forthcoming book: There Ain't No Such Thing As A Free Lunch - A Liberterian Perspective On Environmental Policy, comments:

"Ecuador's dilemma over oil development perfectly illustrates the TANSTAAFL principle.

Oil revenue isn't a free lunch for Ecuador, which will pay through destruction of part of its environmental heritage, and very likely pay again through corruption spawned by oil wealth.

Meanwhile, the U.S. policy of keeping oil prices low in the name of "affordable energy" makes the problem worse by encouraging consumption.

Trying to make something look free by pricing it below opportunity cost just means paying more in the long run. If Ecuador could be depended on to keep its promise to leave the oil in the ground (a big "if"), raising the U.S. gas tax and using part of the proceeds to give Ecuador the support it wants to preserve the rain forest would be a win-win situation.''

Last modified on Monday, 15 August 2011 07:58

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